Natural Gas

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Natural Gas Weekly Update

for week ending May 17, 2017   |  Release date:  May 18, 2017   |  Next release:  May 25, 2017   |   Previous weeks


JUMP TO: In The News | Overview | Prices/Supply/Demand | Storage

In the News:

First floating liquefaction facility begins operations

On April 20, 2017, the world's first floating liquefaction facility (FLNG), the PFLNG Satu, completed delivery of its first cargo of liquefied natural gas (LNG). PFLNG Satu has a production capacity of 0.16 billion cubic feet per day (Bcf/d) (1.2 million metric tons per year) and was developed by Petronas, a Malaysian oil and natural gas company. PFLNG Satu produced its first LNG on December 5, 2016 from the Kanowit natural gas field, located offshore of the state of Sarawak, Malaysia. The vessel will be anchored offshore and produce from the Kanowit field for five years before moving to other natural gas fields in the region. The PFLNG Satu vessel is projected to be used for 20 years.

PFLNG Satu is a new LNG vessel built with on-board liquefaction technology. An existing LNG carrier can also be converted into an FLNG carrier by installing the specialized liquefaction equipment.

Floating LNG technology provides a means to monetize stranded offshore natural gas resources. Also, since most FLNG facilities are small-scale compared to a typical onshore liquefaction terminals, they require a smaller capital investment, and avoid lengthy onshore permitting process.

Currently, there are three FLNG projects under construction worldwide, with a total capacity of 1 Bcf/d. These projects will be located in the offshore areas of Australia (Prelude FLNG), Malaysia (PFLNG 2), and Cameroon (Cameroon FLNG). Two of these projects—Prelude and PFLNG 2—will use newly built vessels, while Cameroon FLNG opted to convert the existing LNG carrier Hilli into an FLNG.

An additional 24 FLNG projects have been proposed, totaling 20.7 Bcf/d, with the majority to be located in the offshore areas of the United States, Australia, and Canada, according to a report by the International Gas Union. Other proposed locations include offshore areas of several African countries, Iran, and Russia. While it is not likely that all of the proposed FLNG plants will be developed, the smaller size of these projects and the lower construction costs may help some of these projects reach completion.

Overview:

(For the Week Ending Wednesday, May 17, 2017)

  • Natural gas spot prices were mixed this report week (Wednesday, May 10 to Wednesday, May 17). The Henry Hub spot price rose from $3.11 per million British thermal units (MMBtu) last Wednesday to $3.16/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the June 2017 contract price fell 10¢ from $3.292/MMBtu last Wednesday to $3.192/MMBtu yesterday.
  • Net injections to working gas in underground storage totaled 68 billion cubic feet (Bcf) for the week ending May 12. Working natural gas stocks are 2,369 Bcf, which is 14% less than the year-ago level and 12% more than the five-year (2012–16) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 11¢, averaging $6.09/MMBtu for the week ending May 17. The price of natural gasoline, ethane, propane, and butane rose by 4%, 2%, 1%, and 2%, respectively. The price of isobutane remained flat week over week.
  • According to Baker Hughes, for the week ending Friday, May 12, the natural gas rig count decreased by 1 to 172. The number of oil-directed rigs rose by 9 to 712. The total rig count increased by 8, and it now stands at 885.

more summary data

Prices/Supply/Demand:

Price movements mixed. This report week (Wednesday, May 10 to Wednesday, May 17), the Henry Hub spot price rose 5¢ from $3.11/MMBtu last Wednesday to $3.16/MMBtu yesterday. At the Chicago Citygate, prices decreased 3¢ from $3.08/MMBtu last Wednesday to $3.05/MMBtu yesterday. Prices at PG&E Citygate in Northern California decreased 7¢, down from $3.42/MMBtu last Wednesday to $3.35/MMBtu yesterday. The price at SoCal Citygate decreased 6¢ from $3.23/MMBtu last Wednesday to $3.17/MMBtu yesterday.

Algonquin prices rose significantly. At the Algonquin Citygate, which serves Boston-area consumers, prices rose $1.00 from $3.17/MMBtu last Wednesday to $4.17/MMBtu yesterday, as hot weather affected power demand. Spot prices in Boston may also have been influenced by a capacity reduction at Algonquin's Burrillville Compressor Station in Rhode Island. The Transcontinental Pipeline Zone 6 trading point for New York saw prices increase 20¢ from $2.98/MMBtu last Wednesday to $3.18/MMBtu yesterday.

The Marcellus area did not see the same price increases as Boston and New York City. Tennessee Zone 4 Marcellus spot prices decreased 6¢ from $2.74/MMBtu last Wednesday to $2.68/MMBtu yesterday. Prices at Dominion South in northwest Pennsylvania fell 11¢ from $2.88/MMBtu last Wednesday to $2.77/MMBtu yesterday.

June Nymex contract falls. At the Nymex, the price of the June 2017 contract decreased 10¢, from $3.292/MMBtu last Wednesday to $3.192/MMBtu yesterday. The price of the 12-month strip averaging June 2017 through May 2018 futures contracts declined 7¢ to $3.309/MMBtu.

Supply decreases. According to data from PointLogic, the average total supply of natural gas fell by 1% compared with the previous week. Dry natural gas production remained constant week over week. Average net imports from Canada decreased by 9% from last week.

Demand falls. Total U.S. consumption of natural gas fell by 1% compared with the previous report week, according to data from PointLogic. Warmer temperatures in the East influenced a 10% increase in power burn. Residential and commercial consumption fell by 16%. Industrial sector consumption decreased by 2% week over week. Natural gas exports to Mexico increased 5%.

U.S. LNG exports remain flat week over week. Four vessels (combined LNG-carrying capacity of 13.8 Bcf) departed Sabine Pass last week (Thursday to Wednesday).

more price data

Storage:

Smaller-than-average net injections into working gas storage reported in most regions of the Lower 48 states. Net injections into storage totaled 68 Bcf, compared with the five-year (2012–16) average net injection of 87 Bcf and last year's net injections of 71 Bcf during the same week. By far, the largest shortfalls in net injections, compared with the five-year average, occurred in the East and Midwest regions where continued cooler-than-normal temperatures likely contributed to increased heating demand for natural gas. The East and Midwest regions reported net injections that were 11 Bcf and 9 Bcf below the five-year average, respectively. The Mountain and South Central nonsalt regions were the only ones that posted net injections topping their respective five-year averages, with the Mountain region bettering its five-year average by 3 Bcf and the South Central nonsalt region 2 Bcf above its five-year average. However, total net injections in the South Central region were still 1 Bcf lower than the five-year average.

Working gas levels are 14% lower than last year's record levels, but well ahead of the five-year average. Working gas stocks total 2,369 Bcf, which is 256 Bcf more than the five-year average and 375 Bcf less than last year at this time. This year-over-year deficit prevails in each of the regions of the Lower 48 states. The South Central region has the largest year-over-year deficit, at 140 Bcf. The East region has the largest deficit in relative terms, at 120 Bcf, 25% lower than last year's stock level. The Midwest region is 63 Bcf lower than last year at this time, and the Pacific region is 48 Bcf lower than last year's level. In contrast, working gas levels are higher than the five-year averages in all regions except the East and the Pacific regions, which are 57 Bcf and 20 Bcf lower than their five-year averages, respectively. The South Central region accounts for 203 Bcf of the surplus compared with the five-year average, and the Midwest region is 97 Bcf higher than the five-year average. The deficit compared with last year's level narrowed in every region outside of the East and Midwest.

The January futures price is trading at a premium over the current spot price, but the premium is well behind last year's level at this time. During the most recent storage week, the average natural gas spot price at the Henry Hub was $3.09/MMBtu, while the Nymex futures price of natural gas for delivery in January 2018 averaged $3.63/MMBtu, a difference of 54¢. The premium was $1.12 a year ago. Nonetheless, the price premium continues to provide incentives for injections of natural gas into storage.

Reported net injections are on the high side of the range of market expectations for the week. According to the May 17, 2017, issue of The Desk survey of natural gas analysts, estimates of net injections to working natural gas storage ranged from 57 Bcf to 68 Bcf, with a median of 62 Bcf. Prices of the Nymex futures contracts for June 2017 delivery at Henry Hub decreased 3¢ to $3.17/MMBtu in 644 trades at the release of the Weekly Natural Gas Storage Report (WNGSR). Prices varied in subsequent trading, increasing to $3.18/MMBtu.

Temperatures were lower-than-normal in most parts of the Lower 48 states, led by key natural gas consuming areas. Temperatures in the Lower 48 states averaged 58°F, 2°F lower than the normal and 1°F lower than last year at this time. Temperatures were lower than normal in the key gas-consuming Northeast region, where the New England and Middle Atlantic Census Divisions were 3°F and 4°F, respectively, lower than normal. The East North Central Census Divisions also reported cooler-than-normal temperatures, falling 5°F short of the mark. Temperatures in the West North Central Census division averaged 60°F, 2°F higher than the normal and the same as last year at this time. Temperatures in the East South Central Census division averaged 63°F, 2°F lower than the normal and the same as last year at this time. Temperatures in the West South Central Census division averaged 70°F, the same as both normal and as last year at this time. Temperatures in the Pacific Census division averaged 59°F, the same as both normal and as last year at this time. Temperatures in the Mountain Census division averaged 61°F, 4°F higher than the normal and 2°F higher than last year at this time.

more storage data

See also:



Natural gas spot prices
Spot Prices ($/MMBtu)
Thu,
11-May
Fri,
12-May
Mon,
15-May
Tue,
16-May
Wed,
17-May
Henry Hub
3.20
3.25
3.27
3.23
3.16
New York
3.00
2.93
2.89
3.11
3.18
Chicago
3.12
3.10
3.08
3.06
3.05
Cal. Comp. Avg.*
3.13
3.14
3.15
3.04
3.00
Futures ($/MMBtu)
June Contract
3.376
3.424
3.349
3.230
3.192
July Contract
3.461
3.498
3.429
3.315
3.283
*Avg. of NGI's reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Source: NGI's Daily Gas Price Index
Natural gas futures prices
Natural gas liquids spot prices


U.S. natural gas supply - Gas Week: (5/11/17 - 5/17/17)
Average daily values (Bcf/d):
this week
last week
last year
Marketed production
79.9
79.7
80.6
Dry production
70.9
70.8
71.8
Net Canada imports
5.7
6.3
5.7
LNG pipeline deliveries
0.0
0.0
0.0
Total supply
76.6
77.0
77.5

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline deliveries represent gas sendout from LNG import terminals.

U.S. natural gas consumption - Gas Week: (5/11/17 - 5/17/17)
Average daily values (Bcf/d):
this week
last week
last year
U.S. consumption
56.7
57.3
59.8
    Power
24.5
22.4
26.0
    Industrial
19.9
20.3
20.3
    Residential/commercial
12.2
14.6
13.5
Mexico exports
4.2
4.0
3.7
Pipeline fuel use/losses
6.4
6.5
6.7
LNG pipeline receipts
2.2
2.3
0.6
Total demand
69.5
70.0
70.9

Source: OPIS PointLogic Energy, an IHS Company
Note: LNG pipeline receipts represent pipeline deliveries to LNG export terminals.

Natural gas supply


Weekly natural gas rig count and average Henry Hub
Rigs
Fri, May 12, 2017
Change from
 
last week
last year
Oil rigs
712
1.3%
123.9%
Natural gas rigs
172
-0.6%
97.7%
Note: Excludes any miscellaneous rigs
Rig numbers by type
Fri, May 12, 2017
Change from
 
last week
last year
Vertical
77
1.3%
45.3%
Horizontal
742
1.1%
135.6%
Directional
66
-1.5%
73.7%
Source: Baker Hughes Inc.


Working gas in underground storage
Stocks
billion cubic feet (Bcf)
Region
2017-05-12
2017-05-05
change
East
367
350
17
Midwest
540
524
16
Mountain
161
155
6
Pacific
244
238
6
South Central
1,057
1,034
23
Total
2,369
2,301
68
Source: U.S. Energy Information Administration
Working gas in underground storage
Historical comparisons
Year ago
(5/12/16)
5-year average
(2012-2016)
Region
Stocks (Bcf)
% change
Stocks (Bcf)
% change
East
487
-24.6
424
-13.4
Midwest
603
-10.4
443
21.9
Mountain
165
-2.4
129
24.8
Pacific
292
-16.4
264
-7.6
South Central
1,197
-11.7
854
23.8
Total
2,744
-13.7
2,113
12.1
Source: U.S. Energy Information Administration


Temperature – heating & cooling degree days (week ending May 11)
 
HDD deviation from:
 
CDD deviation from:
Region
HDD Current
normal
last year
CDD Current
normal
last year
New England
99
20
0
0
0
0
Middle Atlantic
92
29
8
0
-1
0
E N Central
95
26
24
0
-6
0
W N Central
42
-18
-1
10
2
4
South Atlantic
44
18
5
28
-2
3
E S Central
37
13
5
20
-1
1
W S Central
9
2
-1
42
-3
-1
Mountain
46
-28
-9
15
0
2
Pacific
45
0
3
0
-6
-1
United States
61
10
7
13
-2
1
Note: HDD = heating degree day; CDD = cooling degree day

Source: National Oceanic and Atmospheric Administration

Average temperature (°F)

7-Day Mean ending May 11, 2017

Mean Temperature (F) 7-Day Mean ending May 11, 2017

Source: NOAA National Weather Service

Deviation between average and normal (°F)

7-Day Mean ending May 11, 2017

Mean Temperature Anomaly (F) 7-Day Mean ending May 11, 2017

Source: NOAA National Weather Service